Commissioner of Income Tax v. Panacea Biotec Ltd.

2. The appeal was admitted for hearing vide order dated 15.12.2009 on the following substantial question oflaw: "Whether on a correct interpretation of the relevant statutory provisions, the Tribunal was justified in law in deleting the disallowance ofRs.7,72,25,7257- made by the Assessing Authority being the weighted deduction claimed by the assessee under Section 35(2AB)ofthe Act?"

3. However, the substantial question of law was re-framed vide order dated 13.09.2018 for reasons recorded in paragraphs 2to 10 ofthe said order 2019:DHC:7288-DB (3 which reads as under: "2. The respondent-assessee hadfiled the return ofincomefor the Assessment Year 2003-04 on 28th November, 2003, declaring income of Rs.33,70,62,290/-. This return was revised on 31st March,2005, declaringincome ofRs.33,73,12,760/-.

3. In the original return and the revised return, the respondentassessee had claimed deduction ofRs.7,72,25,723/- under Section 35 (2AB) of the Income Tax Act, 1961 being 150% of the expenditure incurred on in-house research and development of Rs.5,14,83,816/-.

4. The Assessing Officer disallowed the said claim as the respondent-assessee had not been able tofurnish approvalfrom the Secretary, Department ofScientific and Industrial Research (DSIR) on or before passing of the assessment order on 30th March, 2006.

5. The respondent-assessee hadthereuponfiledan appealwith an applicationfor adducing additional evidence under Rule 46A of the Income Tax Rules, 1962 (Rules, for short) enclosing therewith report ofthe DSIR dated 20th July, 2006. For clarity, we may record that the respondent-assessee had applied for approvalto the Secretary,DSIR on 9th January,2006.

6. Commissioner ofIncome Tax(Appeals)for detailedreasons set out in paragraph 4.[2] to 4.3.[2] allowed the application under Rule 46A ofthe Rulesfor taking on record the approval granted by the DSIR dated 20th July, 2006. He has also held that the respondent-assessee was entitled to the saiddeduction.

7. Aggrieved, the Revenue preferred an appeal before the Tribunal on two grounds including deduction allowed under Section 35(2AB)ofthe Act.

8. The Tribunal has rejected the appeal preferred by the Revenue in respect of deduction under Section 35 (2AB), inter alia, recording "From the grounds of appeal we find that the Revenue has not objected to admission ofthe additional evidence byCIT(A)."

9. Counselfor the Revenue has drawn our attention to the grounds of Revenue's appeal recorded by the Tribunal in paragraph 13 of the impugned order. It is submitted that the Revenue had filed an application dated 11th April, 2008 for amendment of the grounds of appeal along with authorization dated 2nd April, 2007, raising several grounds including the ground that the Commissioner ofIncome Tax(Appeals)had erred in law and in facts and circumstances of the case in admitting additional evidence under Rule 46A ofthe Rules. The aforesaid application under authorization has been enclosedas an annexure to the appeal paper book. Thisfact is also mentioned in ground No.10 ofthe grounds ofappeal, which states that the Tribunal's order was vitiated by perversity on account of apparent nonapplication ofmind to the specific grounds raised by the Revenue. The observations ofthe Tribunal, it is alleged, are totally contrary to the record. Specific challenge is made to the admission of additional evidence by Commissioner ofIncome Tax (Appeals) under Rule 46A.

10. We may note that the respondent-assessee has notfile any affidavit controverting or denying that the Revenue has raised the said additionalground ofappeal."

4. The substantial question of law as re-framed vide order dated 13.09.2018 reads as under; "Whether the order ofthe Income Tax Appellate Tribunal dated 30'^ June, 2008, dismissing the appeal ofthe Revenue on the ground that they had notpreferred an appeal against the direction allowing the application under Section 46A of the Income Tax Rules, 1962, is perverse and contrary tofacts?"

5. The respondent-assessee was also given liberty to file an affidavit meeting the assertions made by the Revenue that they had filed and raised additional grounds ofappeal challenging admission ofadditional documents by the Commissioner of Income Tax (Appeals) under Rule 46A of the Income Tax Rules, 1962.

6. The respondent-assessee has filed affidavit of the counsel who had appeared before the Tribunal in the appeal preferred by the Revenue. Another affidavit of Mr. Sunil Kapoor, Advocate, who had appeared for respondent-assessee in the matter was also filed. As per the said affidavits, the Revenue has not filed alleged amended grounds of appeal before the Tribunal. Copy of the alleged memo of grounds of appeal was also not served on the counsel for the respondent-assessee. During the course of arguments also, the departmental representative for Revenue had neither raised the issue nor stated that they have filed additional grounds of appeal challenging the order of Commissioner ofIncome Tax(Appeals) admitting additional documents.

7. The affidavits filed by the respondent-assessee state that the relevant ^ TviIoUlujxLi ' 1 ■ ■ files|nave been weeded outand are nolonger available. Thisis accepted and admitted by the counsel for the Revenue.

8. In the given circumstances, we find it impossible to answer the substantial question oflaw as re-framed. Presumption in law would be that the facts relating to the file/grounds of appeal are correct. It would have been better and more convenientfor the Revenue to have raised the issue by filing an application under Section 254(2)ofthe Act in view ofthe alleged error made in the impugned order, recording that the Revenue had not challenged admission ofadditional evidence i.e. the approval granted by the Department of Scientific and Industrial Research ('DSIR', for short) on 20.07.2006.